Ah, it’s absolutely invigorating to officially start a Limited Liability Company! In the rush of excitement soon thereafter, most entrepreneurs eagerly save receipts, maintain diligent files and will share their company’s vision, unprovoked, with most everyone they encounter. Alas, the initial honeymoon phase fueled by inordinate cups of coffee and sweet treats may begin to wane after a few quarters as founders make the transition from sugar high sprint to a long distance trek. Fear not, the IRS recognizes your LLC as a living, breathing entity regardless of the amount of activity, gains or losses it experiences. It’s absolutely acceptable for your company to ebb and flow through trepidation, solid footing and full- fledged confidence, then back to trepidation on a quarterly or annual basis. The IRS wants your business to thrive and create more jobs and contribute to the economy and simply asks for annual updates from the person or people who initially created this mercurial “toddler.”
Just as the IRS offers parents the option to list the social security numbers for their dependents (for the sake of this analogy, let’s focus on children), the IRS assigns each LLC an EIN number. This number remains intact and attached to its founder(s) moving forward. This prevents the EIN (and your LLC) from being claimed by someone else.
The specific details that determine nuanced filings are underpinned by the type of LLC: sole proprietor, partnership or corporation. Just as a parent may share custody of a child, or have utilized adoption as a form of birth, both are young dependents, but the filing specifics will vary. An accountant or tax specialist can help determine which forms to complete for your LLC. (Typically, these forms are Schedule Cs, 1065s or filing as a corporation/corporate). If you’re not in a position to connect with or afford a tax expert, please check out the user friendly IRS.gov website. Also, most major cities have a Small Business Administration (SBA) program. This collection of local professionals volunteers their time and share their expertise on a wide array of business topics including which exact forms need to be filed. The sba.gov website is a veritable life saver for both start-ups and established businesses. Think of it as the reliable neighborhood grandparents that have successfully reared dozens of infants into independence. Let their collective knowledge help your LLC grow!
Perhaps, unlike the scenarios above, you simply change your mind and do not use your LLC. What happens, then? Always bring it back to communication. The IRS will want to know that you are not using your LLC and yes, there’s a form 966 for this purpose. Of course, please consult a tax advisor for confirmation. There are a few more steps involved in dissolution, but none that are insurmountable. If down the road you decide to resuscitate your LLC, the unique nine digit EIN number that was originally assigned to it will be awaiting its resurrection!